Shinhan Financial Group Co., Ltd. Q1 FY2021 earnings call

• Nominal net income in 2021 Q1 was KRW1,191.9 billion, with recurring income around KRW1,230 billion, the highest ever. Noninterest income grew significantly, and nonbank net income before ownership was at a record high. • NIM rebounded after 2.5 years due to low interest rates. Loan growth contributed to interest income growth. • LIME dispute settled, with low chance of additional large expenses related to investment products. Credit card provisioning decreased 34% Y-o-Y. • Implemented SMART and FRESH strategic directions. Digital transformation: KRW300 billion strategic investment fund for digital business launched, Shinhan Pay introduced. • ESG activities are leading among financial institutions, with indices for zero-carbon drive goals.

2021 Q1 nominal net income was KRW1,191.9 billion, with recurring income around KRW1,230 billion. Noninterest income increased by 40% Y-o-Y and 55% Q-o-Q. Nonbank net income before reflecting ownership was KRW620 billion, an 84% increase Y-o-Y. Group interest income grew by 5.7% Y-o-Y. Noninterest income in Q1 posted KRW1,030.8 billion, growing 40.4% Y-o-Y. Group CIR was 40.6%, the lowest in a decade. Credit cost provisioning declined by 33.6% Y-o-Y. The group's CET1 ratio is 13.0%. Digital contribution to the group's income was 14.2% in Q1.

• G&A expenses are expected to have a slight increase compared to the previous year as new digital and other businesses are developed. • NIM is expected to continue improving going forward. • Fees income is expected to increase more due to the impact of retail investors. • Quarterly dividends are planned, with external factors considered but not a major hindrance to execution.

• COVID-19 support programs are ongoing, and economic uncertainties persist, requiring thorough risk management. • Implications of the Financial Consumer Protection Act are still unclear, with financial institutions still adapting to its requirements.

Q: Regarding G&A expenses, specifically labor costs increase due to sales-related pay and stock market improvement, and forecast for G&A increase this year.

A: Labor costs increased due to sales-related pay (~KRW20B) and PS-related expenses (~KRW35B). G&A is expected to have a slight increase compared to the previous year as new businesses are developed, offsetting some expenses.

Q: About card business merchant fees readjustment and guidance.

A: Analyzing costs, fees will be determined considering market conditions, and no impact on earnings this year from fee readjustment.

Q: Net interest margin outlook and LIME-related fees.

A: NIM expected to continue improving, with room for ALM improvement. LIME-related effects are already incorporated, and no further large financial impact from LIME. Fees income expected to increase more due to retail investor impact.

Q: About Orange Life earnings and Financial Consumer Protection Act impact on dividends.

A: Orange Life had good earnings from securities sales. Financial Consumer Protection Act implications are being adapted to, and quarterly dividends plan is ongoing with external factors considered.

Q: About M&A plans abroad.

A: Keeping an eye on M&A opportunities with ROI over 10% and synergy, focusing on fintech and platforms with user bases. Global strategy considers balance, with interest in Southeast Asian opportunities.